Poor women double labor inactivity

The Universal Child Allowance is not having major impact on mother’s decision to work. This is one of the main weaknesses of this social program since, by not stimulating labor participation, it reduces the chances of overcoming poverty. Social progress and gender equality require that poor women overcome the “inactivity trap”. To achieve this goal, there need to be a deep rethinking of educational and childcare policies.

Since its creation at the end of 2009, the Universal Child Allowance (AUH, for its acronym in Spanish) generated intense debate on the possible disincentives to work of women who receive it. Since the subsidy is granted considering the women’s number of children, and is conditioned to tasks that are culturally imposed to mothers (children medical check-ups and schooling) a side effect that could arise is beneficiaries confining themselves to domestic labor.

Eight years after its creation, press reports of a UNICEF, University of Buenos Aires and the University of La Plata study state that the AUH probably had no significant impact on women’s decision to work or their employment rate. Therefore, it would be possible to conclude that the AUH has not generated disincentives to work.

Although this study has not yet been published, with information from the INDEC household survey, this topic can be analyzed. Considering the group of women who declare to receive some social assistance subsidy and are at prime childbearing and working age (between 25 and 45 years old), it can be seen that between 2009 and 2016 the following has happened:

Of the total number of women in this group, labor inactivity rate (women who do not work and are not searching for job) went from 30% to 31%.

Among women in households that do not receive subsidies, the rate of labor inactivity remained stable at 28%.

Among women in households that receive subsidies, the rate of labor inactivity fell from 52% to 50%.

These data shows that the incidence of female labor inactivity has remained fairly stable among women who receive social assistance and women who do not. Although the INDEC survey does not identify the social program that the household is receiving, due to its massiveness, it is highly frequent that it is the AUH what they receive. This suggests that many of the women who participated in the labor market back in 2009, when they started receiving the AUH they remained in the labor market. Not having induced labor market exit is a positive effect of the program. Nevertheless, the evidence also shows that poor women continue to suffer twice as much labor inactivity as non-poor ones. That such a financial effort in terms of social assistance has not resulted in a change of the female labor market participation is negative.

The persistence of the high incidence of the labor inactivity rate is associated with severe inequities. On the one hand, it means reducing the state intervention to the modest goal of alleviating extreme poverty. With welfare transfers, without facilitating and inducing women’s access to employment, neither poverty will be overcome nor social mobility promoted. On the other hand, gender inequality is perpetuated, since the cultural tendency to confine women to the domestic and reproductive roles is validated.

It is not about minimizing the complexity of factors that determine social marginality. But there are tools that could increase the progressiveness of welfare policies. One aspect that could be evaluated is adding to the conditionals of medical checkups and school attendance, stimuli for the mother’s labor market participation. Chile, in this sense, has been a pioneer. Early evidence indicates that female labor force participation in that country has increased, particularly among the poorest women.

More important than social assistance are the policies that accompany it. Particularly, the promotion of high school and job training for poor women together with high quality child care systems. Both are local governments’ functions, so it is not advisable that the national government interferes. On the contrary, the main collaboration that the national government can provide are the reform in the tax co-participation system, so that taxes reach basic education and child care, and setting up monitoring schemes to induce provinces and municipalities to invest and manage with high quality these strategic social services.